The board called a crisis meeting on Wednesday after it emerged that directors Russell Aboud and Shane Finemore were entwined in the SEC crackdown. The two directors “resigned" on the same day. They are said to have done so voluntarily although chairman Rick Holliday-Smith would have been under pressure to ask them to go.

It is still unclear when the directors first became aware of the SEC investigation or when they told the board.

The ASX did not volunteer the information either. Many in the Australian market first became aware of the fines when details of an SEC statement were picked up and reported on The Australian Financial Review’s web site.

The ASX is under greater pressure than any other company, including the big four banks, and should be taking a pro-active role to ensure its directors and staff adhere to the highest standards of corporate governance. It was a perception issue that resulted in their resignation rather than any legal or regulatory requirement.

“While the matter that triggered their decision does not raise concerns in relation to the governance of ASX, they made their decision after careful consideration of the best interests of the company," Holliday-Smith said in a statement emailed to The Australian Financial Review on Thursday.

Even though Finemore and Aboud say they have not done anything wrong and the case did not compromise their role as directors, Holliday-Smith had no other choice but to clear the decks.

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The exchange is confident their resignation resolves any corporate governance issues for the board. It does not intend to review the criteria for appointing directors. However, it is still unclear when the directors first became aware of the SEC investigation and when they told the board.

While the ASX has also lost two long-serving, and no doubt, talented directors, further board renewal is not a bad thing for the company. Former Treasury secretary
Ken Henry
joined the board in February and the former head of the Australian Industry Group
Heather Ridout
replaced
Jillian Broadbent
in August last year.

The short-selling that was subject of the SEC investigation was an inadvertent breach of the rules, but that does not matter in the SEC’s world where it has the right to take action even when there is no intent.